CASE UPDATE: Drug and Alcohol Treatment Facility Owner Pleads Guilty To Paying Illegal Kickbacks To Philadelphia Recovery Homes

May 20, 2022 | Topic: Criminal

HARRISBURG—Attorney General Josh Shapiro announced Southwest Nu-Stop Philadelphia Inc. (Southwest), a Philadelphia-based drug and alcohol treatment facility, and its owner Dr. Lloyd Reid pleaded guilty to Medicaid fraud for paying illegal kickbacks to recovery homes in Philadelphia. As a result of this investigation, Southwest closed both of its locations and has ceased operations.

“As we continue to battle the opioid crisis in Pennsylvania, it’s vital that individuals struggling with addiction have treatment professionals who they can trust. Dr. Reid took advantage of the very individuals he was supposed to be helping through recovery – all for personal gain and greed,” said Attorney General Shapiro. “Thanks to the hard work of my office and our federal partners at the Department of Health and Human Services, his operation has been shut down for good.”

The investigation conducted jointly by the Office of Attorney General Medicaid Fraud Control Section and the United States Department of Health and Human Services (HHS) showed that Reid and Southwest profited by receiving millions of dollars from Medicaid in exchange for providing poor quality treatment to recovery home residents who were forced to attend treatment at their facilities. The recovery homes would threaten the residents with life on the streets if they choose to attend treatment at a different facility. More than 75 percent of all of Southwest’s patients resided at a recovery home.

The facility was repeatedly reprimanded by Philadelphia’s Community Behavioral Health (CBH) for providing substandard care to its patients. Southwest continued to provide insufficient treatment to its patients, and in January 2020, a client fatally overdosed while at Southwest’s treatment facility.

The investigation revealed between December 2016 and June 2019, Southwest received more than $12,662,864 in Medicaid funds for allegedly providing drug and alcohol treatment. During this time, Reid paid recovery homes over $1,178,453 in kickbacks.

Southwest and Reid both entered a guilty plea to the charge of Medicaid Fraud. Sentencing will be scheduled for a later date. The case was investigated by Supervisory Special Agent James Conn, and is being prosecuted by Senior Deputy Attorney General Eric Stryd.

The Pennsylvania Medicaid Fraud Control Unit receives 75 percent of its funding from the U.S. Department of Health and Human Services under a grant award totaling $9,133,920 for Federal fiscal year (FY) 2022. The remaining 25 percent, totaling $3,044,638 for FY 2022, is funded by Pennsylvania.

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